Guam Governor Using Next Year's Cash For This Year's Tax Refund Expenses
Guam - Governor Eddie Calvo has ordered the Department of Administration to pay tax refunds with Section 30 money. However, this Section 30 money is cash that is already budgeted for next fiscal year which means GovGuam is spending next year's cash on this year's expenses.
I think it was an interview with you that I said I thought that was how he was gonna be able to make the payments so I'm not surprised, said Vice-Speaker BJ Cruz. Cruz is referring to the Governor's letter to the Department of Administration instructing them to use Section 30 money to pay out tax refunds.
Section 30 money comes from the federal taxes on federal employees and military personnel on Guam. The federal government remits this Section 30 money to GovGuam every year in September.
According to DOA Spokesman Phil Blas GovGuam owes about $46 million in tax refunds. Vice-Speaker Cruz expects Section 30 to be about $70 million dollars which is more than enough to pay out tax refunds. The only problem with this funding source is that it's already budgeted as a funding source for the next fiscal year. What does this mean? "Well he's going to be creating a shortfall in his revenue for the month. Whether or not he ends up in a deficit depends on how much is actually collected during that year. And trying not to have that happen was the reason why Senator Ben many years ago passed a law about provisions for tax refunds where you were supposed to put in a certain percentage into this savings account for tax refunds so that by December 31st of this year you should already have a $152 million dollars or a $125 million dollars in the account so that when people start filing in January 2nd in the next year there's already money that you can start paying out," said Vice-Speaker Cruz.
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